Wednesday, February 29, 2012

Least transparent companies 2011

Corporate Responsibility Magazine link wrote an interesting article called THE BLACK LIST.  This list is the second annual register of the least transparent companies in the United States.  (The list in its entirety is located at the bottom of this article.)

As Brandeis put it, "sunshine is said to be the best of disinfectants."  And public companies  are expected to be open and transparent, as per their very nature (public filings, earnings reports, etc).

The "Black List" is defined as "the members of the Russell 1000 who have the last voluntary public disclosure of the voluntary data elements."  In layman's terms, this means that any company that appears on the list could be off if they just disclosed one data element.

The method used to determine the Black List is similar to the method used for its popular Best Citizens list.  Data are collected in seven categories including Climate Change, Employee relations, Environment, Financial, Governance, Human rights and philanthropy.  Employee relations, and the Environment are the two elements with the highest weighting (nearly 20% each).  Governance was the lowest (7% weighting).

Given the vast amount of data that must be delved into, IW Financial (the company behind the list) shares the results with the companies before the data is published.  This gives them the opportunity to point out mistakes, misunderstandings, etc.

Biggest Surprise: 

Dreamworks Animation:
This company, while not being a role model for Corporate Social Responsibility should not be on the Black List.  It is true that Dreamworks doesn't have a Corporate Social Annual Report and doesn't disclose its efforts to reduce its environmental footprint (this author personally checked filings).  Dreamworks doesn't worry about Climate Change except on how it could negatively affect its costs of business and audience levels.  They also disclose no opinions of efforts to make the world a better place.  They are apolitical, though their animated movies are another story.  Further, Dreamworks doesn't disclose any large philanthropy or community programs.

However, the Black List is supposed to give a run-down on companies that disclose nothing.  Dreamworks is far from that.  In fact, its website does a good job in Corporate Governance (see below).  The company, for example, has a contact link allowing anyone to contact the Board of Directors.  It also distinguishes which board members are on the Audit, and Compensation committees.

Source: Dreamworks Animation SKG

A large part (about 20% of the score) of the Black List, consists of checking whether a company has good employee relations.  IW Financial, which was responsible for the Black List research said that it checked several public sources (not just company websites, annual reports).

However, one need look far when checking Employee Relations as Dreamworks Animation has been on the Fortune 100 Best Companies to Work For link years, including its most recent survey.  In fact, Dreamworks Animation was in the Top 10 two years in a row!

Fortune's site not only gives a short description of why people like working there, but also stats on pay (which is high) health programs (they have a gym) work life balance, Diversity (nearly 1/3rd are women) and employee training.

Fortune Magazine 2011

Though, independent companies that rate corporate ESG efforts do give Dreamworks Animation mixed blessings.  The company is rated average by CSR Hub (see table) and "Below Average" by Audit Integrity (for aggressive accounting and weak governance).  However, Dreamworks is rated "Green" by Risk Metrics for effective ESG management.

Source: CSR Hub: ratings

The 2011 Black List
American Financial Group Inc. AFG
Assured Guaranty Ltd. AGO
Aspen Insurance Holdings AHL
Ares Capital Corp. ARCC
Axis Capital Holdings Ltd. AXS
Bio-Rad Laboratories Inc. BIO
Brown & Brown, Inc. BRO
Bancorpsouth Inc. BXS
CareFusion Corp. CFN
Chimera Investment Corp. CIM
Core Laboratories N.V. CLB
Cooper Companies, Inc. COO
Dreamworks Animation Inc. DWA
Endurance Speciality Holdings ENH
Eaton Vance Corp. EV
Frontline Ltd. FRO
Forest Oil Corp. FST
Frontier Oil Corp. FTO
GenOn Energy, Inc. GEN
Hansen Natural Corp. HANS
HCC Insurance Holdings, Inc. HCC
Health Care Reit, Inc. HCN
Hospitality Properties Trust HPT
InterContinental Exchange Inc. ICE
Lazard Ltd. LAZ
Liberty Media Holding Corporation Capital LCAPA
Liberty Media Holding Corporation Interactive LINTA
Liberty Starz Group LSTZA
Lincare Holdings Inc. LNCR
Leucadia National Corp. LUK
Markel Corp. MKL
Madison Square Garden Inc. MSG
Nasdaq Omx Group Inc. NDAQ
National Fuel Gas Co. NFG
NII Holdings Inc. NIHD
Annaly Capital Management Inc. NLY
Realty Income Corp. O
Omnicare Inc. OCR
Partnerre Ltd. PRE
Patterson-UTI Energy Inc. PTEN
Everest Re Group Ltd. RE
Regal Entertainment Group RGC
RenaissanceRe Holdings Ltd. RNR
SL Green Realty Corp. SLG
Solera Holdings Inc. SLH
SXC Health Solutions Corp. SXCI
Techne Corporation TECH
TFS Financial Corporation TFSL
Titanium Metals Corp. TIE
Torchmark Corp. TMK
Trinity Industries, Inc. TRN
Unitrin, Inc. UTR
Ventas, Inc. VTR
W.R. Berkley Corp. WRB
Wesco Financial Corp. WSC
Alleghany Corp. Y
Zions Bancorporation ZION

Monday, February 20, 2012

Green Brand Survey

Here's an interesting survey from Landor Associates.  Landor is a consulting company with particular expertise in Branding, especially consumer attitudes about the environment.  The company's come a long way in a few short years.  Since 2006, it's expanded its survey from 500 U.S. respondents to 9,000 across eight countries.

June'11's survey is interesting for these reasons:
  • It's based on a transversal study comparing several countries, so different consumer attitudes and cultures can be assessed.
  • it demonstrates key differences amongst consumers in developing versus developed countries
  • these differences are not what one might expect (read on!)
What Landor's survey is not....
  • It is not a survey of company's rankings on Corporate Social Responsibility ("CSR") efforts.  However...
Attributes of the 2011 U.S. Rankings:
  • Nearly all of the companies on this list are in fact on several SRI lists
  • Private companies are included
  • Small companies are also listed
  • Four are "born green" establishments (i.e, Seventh Generation)
Source:  Landor Associates, 2011

 Biggest Surprises:
  • Consumers, especially in Australia and in the States, believe that the Energy industry does the best job of protecting the environment.
  • Hmm, strange.  Remember, this is not a survey of corporate CSR.  What I can tell you is that the large Energy multinationals are great at advertising their green efforts.   Could this be propaganda?  maybe...
  • In other countries, including Germany, India and China, the Technology sector was cited as being the biggest protector of the environment.
  • In Developed (aka Rich) countries, the greatest hurdle to purchasing green was price.  Hmm...perhaps this is related to the weak European and U.S. economies...
 Biggest "no kidding" finding:
  • Brands that people can "touch & feel" are the ones that were most represented in Landor's Top 10 list.
  • This makes sense because such products are seen everyday by consumers shopping for personal care items, groceries, household cleaners, etc.
Does the Economy affect the Green Consumer?
  • Yes, a weak economy, or even perception thereof, does affect consumer behavior.
  • Sadly, the U.S. consumer is hurting and is now considering Value of vital importance purchase decisions.
  • Note that until recently (2012) consumer confidence numbers were outright terrible.  The Financial Crises is long over, however, consumer confidence is coming-off its lowest point since the recession and low-point of the U.S. stock market (March 2009).
    • In fact, an evolution of U.S. data shows that while consumers are willing to spend more on green products, fewer respondents have felt this way versus previous years' surveys.

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